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Child maintenance through dividends?

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    Child maintenance through dividends?

    Hi All,
    I'm a semi regular poster, but hopefully I'll be allowed this temporary user ID to mask my normal one for obvious reasons.

    It is looking increasingly like my wife and I are going to separate. She's currently a 50% shareholder, director, and is paid a nominal wage to do basic book keeping etc. by my ltd. If we split that will obviously change.

    Is it possible to wind down my existing ltd and spin up a new one with 2 classes of shares - one for the director ie me and one my wife who would solely be a shareholder.

    If and when we split I would then be able to make dividend payments to her direct from the company. Assuming I gift the shares to her before we split, I can't see a legal reason why this wouldn't be allowed, but am willing to be corrected.

    #2
    Originally posted by notasockie View Post
    Hi All,
    I'm a semi regular poster, but hopefully I'll be allowed this temporary user ID to mask my normal one for obvious reasons.

    It is looking increasingly like my wife and I are going to separate. She's currently a 50% shareholder, director, and is paid a nominal wage to do basic book keeping etc. by my ltd. If we split that will obviously change.

    Is it possible to wind down my existing ltd and spin up a new one with 2 classes of shares - one for the director ie me and one my wife who would solely be a shareholder.

    If and when we split I would then be able to make dividend payments to her direct from the company. Assuming I gift the shares to her before we split, I can't see a legal reason why this wouldn't be allowed, but am willing to be corrected.
    Happy to be corrected, but I think that might fall foul of S660 income shifting rules.

    Comment


      #3
      Keep your business well away from your ex wife. Nothing good can come from it at all.
      'CUK forum personality of 2011 - Winner - Yes really!!!!

      Comment


        #4
        Originally posted by northernladuk View Post
        Keep your business well away from your ex wife. Nothing good can come from it at all.
        Ditto.....best to keep things separate

        Comment


          #5
          Originally posted by Manic View Post
          Happy to be corrected, but I think that might fall foul of S660 income shifting rules.
          Not necessarily, OP would clearly no longer retain any interest in the shares or any of the distributed income.

          But I agree with what NLUK said.

          Comment


            #6
            Also, just touching on this comment:

            If and when we split I would then be able to make dividend payments to her direct from the company
            If you were hoping to effectively pay the child maintenance to her as dividends through your company, she might have something to say...

            Child maintenance payments are not included as income and don't impact taxable benefits, such as income support.

            Whereas, if you were to pay her dividends, she is likely to have tax due on these and it may impact what benefits she can claim too, as this would be included as part of her income for the year.

            HTH
            We're all ears!

            Comment


              #7
              Louisa makes a good point and of course OP’s wife might not appreciate having to do an annual tax return either (or continue doing one as she currently does).

              Comment


                #8
                It may or may not be relevant or of interest. Child maintenance is calculated on your declared earnings. Some more info here:

                https://www.change.org/p/theresa-may...iter=550184939

                Comment


                  #9
                  Is it worth considering loaning the funds directly to the child in a fast depreciating foreign currency via the Oude Joris Dutch Antilles Child Welfare Trust?

                  Comment


                    #10
                    I am a few steps ahead in the divorce process and all the advice given to me was to keep company and maintenance totally separate, get wife off the ltd asap and have it written in the financial order that she has no comeback to the ltd going forwards.
                    ______________________
                    Don't get mad...get even...

                    Comment

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